Sub.
S.B. 267
127th General Assembly
(As Reported by H. Financial Institutions, Real Estate, & Securities)
Sens. Faber, Seitz, Cates, Coughlin, Fedor, Harris, Kearney, D. Miller, Niehaus, Wilson, Spada, R. Miller, Wagoner, Stivers, Schuler, Mumper, Mason, Smith, Amstutz, Padgett
Reps. D. Stewart, Hite, Zehringer
BILL SUMMARY
· Distinguishes the two existing sub-groups in the Public Employees Retirement System (PERS) law enforcement division by creating a public safety officer division.
· Includes in the PERS public safety officer division officers whose primary duties are other than to preserve the peace, protect life and property, and enforce Ohio laws and all Hamilton County Municipal Court bailiffs.
· Permits the PERS Board to establish a program under which a PERS member may convert up to five years of credit for non-law enforcement service to credit for service as a law enforcement officer by paying not less than 100% of the additional liability resulting from the conversion.
· Provides that the member contribution rate for PERS law enforcement officers is the rate established for PERS public safety officers plus an additional percentage, which is initially 1% of members' earnable salaries but may be increased by the Board to not more than 2%.
·
Removes
municipal public safety directors from the PERS law enforcement division and
includes those members in regular PERS.
·
Limits monthly
reimbursement by PERS and the Ohio Police and Fire Pension Fund (OP&F) for
Medicare Part B premiums to an amount determined by both the appropriate board
that is not less than $96.40, except that the reimbursement cannot exceed the
amount paid for coverage.
CONTENT AND OPERATION
The Public Employees Retirement System (PERS) has special retirement and benefit provisions for members who are law enforcement officers (see COMMENT). Current law distinguishes two groups within the law enforcement division. The groups are composed of the same state, county, and township officers,[1] but are divided by the primary duties of the officer. Officers whose primary duties are the preservation of the peace, protection of life and property, and enforcement of Ohio laws qualify for a normal retirement benefit starting at age 48 with 25 years of service. Those officers whose primary duties are other than to preserve the peace, protect life and property, and enforce the laws of Ohio are eligible for a normal retirement benefit starting at age 52 with 25 years of service.[2] Under current law, a law enforcement officer's group, and, therefore, retirement eligibility, is determined at retirement, rather than during actual service.
(R.C. 145.01(YY) and 145.33(B))
The bill creates the PERS public safety officer division to distinguish between the two law enforcement officer groups. Under the bill, officers will be determined to be in the law enforcement or public safety officer division at the time of service rather than at retirement. Those who will be eligible to retire at age 48 will continue to be in the law enforcement division. Those who will not be eligible until age 52 will be in the new public safety officer division.[3]
Under current law, no specific statutory provisions exist to determine retirement eligibility at age 52 for a member who has service both as an officer whose primary duties were to preserve the peace, protect life and property, and enforce the laws of Ohio (law enforcement officer) and service as an officer whose primary duty was other than to preserve the peace, protect life and property, and enforce the laws of Ohio (public safety officer). The bill specifically permits a member to combine service as a public safety officer and service as a law enforcement officer to meet the 25 years of service requirement necessary to retire at age 52.[4]
The bill makes a technical change to continue current law's requirement that, to retire at age 48, the member must have 25 years as a law enforcement officer whose primary duties were to preserve the peace, protect life and property, and enforce the laws of Ohio. It makes clear that a member may not combine public safety officer service with law enforcement service to meet the requirements necessary to retire at age 48. An additional technical clarification is included to continue current law that allows a member to receive an annuity for non-law service that is in addition to the 25 years of service necessary to retire at age 48 under the law enforcement division or age 52 in the public safety officer division.[5]
(R.C. 145.2914)
The bill permits the PERS Board to establish a program under which non-law enforcement service is treated as law enforcement officer service for purposes of determining retirement benefits and eligibility. For each year of service credit converted, the member is to pay an amount determined by the PERS Board that is not less than 100% of the additional liability resulting from the purchase of that credit. The member must agree to retire within 90 days of the conversion.[6] The number of years a member may purchase under this program is limited to five.[7]
(R.C. 145.49)
Current law provides that law enforcement members contribute 10.1% of their salaries to PERS (see COMMENT, below). The Board is authorized to calculate employee contribution rates separately for officers whose primary duties are other than to preserve the peace, protect life and property, and enforce Ohio laws. The current rate established by the Board for all law enforcement officers is 10.1%.[8]
The bill provides that the PERS Board may calculate contribution rates for PERS public safety officers. Under the bill, the contribution rate of PERS law enforcement officers is to be the rate established by the Board for public safety officers plus an additional percentage that is to be initially 1% and may be increased to no more than 2% of the officers' salaries.[9]
(R.C. 145.01; Section 3)
Under current law, municipal public safety directors[10] are PERS members and are in the law enforcement division.
The bill removes municipal public safety directors from eligibility for participation in the PERS law enforcement division. The result is that after the bill's effective date these PERS members will participate in regular PERS.
Service credit previously earned as a municipal public safety director may continue to be used to determine enhanced benefits under PERS law enforcement provisions.[11] Any credit earned on or after the bill's effective date will be regular PERS credit.
(R.C. 145.58 and 742.45)
PERS and the Ohio Police and Fire Pension Fund (OP&F) provide health insurance coverage to recipients of service, disability, and survivor benefits, but those eligible for Medicare[12] must sign up for it. PERS and OP&F reimburse recipients the premium they pay for Medicare Part B. The premium is currently $96.40 a month for most Social Security beneficiaries.[13]
The bill provides that monthly Medicare Part B reimbursement is an amount determined by the PERS Board that is not less than $96.40, except that the Board is prohibited from paying an amount that exceeds the amount the recipient paid for the coverage. On request, the recipient must certify to PERS the amount paid for coverage.
Under the bill, monthly Medicare Part B reimbursement is an amount specified by the OP&F Board or determined by a formula established by the Board that is not less than $96.40, except that the Board is prohibited from paying an amount that exceeds the amount the recipient paid for the coverage. The bill also prohibits the Board from paying more than one monthly premium to a recipient, even if the recipient is receiving more than one benefit from OP&F, or paying a monthly Medicare Part B premium to a recipient who is receiving reimbursement from any other source.
COMMENT
The following chart shows the differences in contribution rates, retirement eligibility, and benefit calculations between regular PERS members and members in PERS law enforcement. Under the bill, the provisions for PERS law enforcement officers whose duties are other than to preserve the peace, protect life and property, and enforce the laws of Ohio largely apply to public safety officers.
|
Current Law |
The Bill |
|||
|
PERS Feature |
Regular PERS Members |
PERS Law Enforcement
Officers whose duties are to preserve
the peace, protect life and property, and enforce the laws |
PERS Law Enforcement
Officers whose primary duties are other than to
preserve the peace, protect life and property, and enforce the laws |
PERS Public Safety
Officers division under the bill |
|
Employee Contribution Rate |
10% of earnable salary |
10.1% of earnable salary[14] |
10.1% of earnable salary |
Determined by the PERS board |
|
Employer Contribution Rate |
State--14% of earnable salary |
Determined by Board but not to exceed 18.1% of
earnable salary (currently 17.40%) |
Determined by Board but not to
exceed 18.1% of earnable salary (currently 17.40%) |
Determined by board but not to exceed 18.1% of
earnable salary |
|
Regular Retirement
Eligibility |
At any age with 30 or more years of service |
Age 48 with 25 years of service |
Age 52 with 25 years of service |
Same as previous column |
|
Early Retirement
Eligibility |
Age 60 with 5 or more years of service |
Any age with 15 or more years of service, but
payment of benefits is deferred until age 52 |
Any age with 15 or more years of service, but
payment of benefits is deferred until age 52 |
Same as previous column |
|
Disability
Benefit Eligibility |
If membership commenced prior to 7/29/92, younger
than age 60 with at least 5 years of service |
For on-duty illness or injury, at any age,
regardless of length of service |
For on-duty illness or injury, at any age,
regardless of length of service |
Same as previous column |
|
Regular Retirement Benefit
Formulas |
The greater of: |
2.5% FAS x years of service through 25 years of
service, plus 2.1% FAS x years over 25, not to the exceed 90% of FAS |
2.5% FAS x years of service through 25 years of
service, plus 2.1% FAS x years over 25, not to the exceed 90% of FAS |
Same as previous column |
|
Early
Retirement Benefit Formulas |
Less than 30 years of service, or under age 65,
benefit is reduced 3 to 25%, depending on age and years of service |
Under age 62 with at least 15 but less than 25
years of service, 1.5% FAS x years of service |
Under age 62 with at least 15 but less than 25
years of service, 1.5% FAS x years of service |
Same as previous column |
|
Disability
Benefit Formulas |
If a member
prior to 7/29/92, the greater of: |
Same as
Regular PERS |
Same as
Regular PERS |
Same as
previous column |
HISTORY
|
ACTION |
DATE |
|
|
|
|
Introduced |
12-18-07 |
|
Reported, S. Health, Human Services & Aging |
04-03-08 |
|
Passed Senate (32-0) |
04-08-08 |
|
Reported,
H. Financial Institutions, |
|
S0267-RH-127.doc/jc
[1] Both groups include
the following officers: a deputy
sheriff, township constable or police officer in a township police department
or district, drug agent, municipal public safety director, department of public
safety enforcement agent, natural resources law enforcement staff officer, park
officer, forest officer, preserve officer, wildlife officer, state watercraft
officer, park district police officer, conservancy district officer, veterans'
home police officer, special police officer for a mental health institution,
special police officer for an institution for the mentally retarded and
developmentally disabled, state university law enforcement officer, municipal
police officer, house sergeant at arms, assistant house sergeant at arms,
regional transit authority police officer, or state highway patrol police
officer.
[2] Hamilton County Municipal Court bailiffs are included in this group.
[3] Neither existing law
nor the bill specifies how this distinction is made. It appears, however, that the employer
determines which officers have as their primary duties preserving the peace,
protecting life and property, and enforcing Ohio laws.
[4] According to Deborah
McCarthy, PERS Assistant Government Relations Officer, allowing a public safety
officer to retire at age 52 by combining public safety officer service and law
enforcement service is current PERS practice (telephone conversation with
Deborah McCarthy, January 7, 2008).
[5] For instance, if a
member has 25 years of law enforcement service and 5 years of non-law
enforcement service, the member may retire and receive a law enforcement
benefit based on 25 years of law enforcement service and an additional annuity
based on the 5 years of non-law enforcement service.
[6] If the member fails to retire, PERS is to
cancel the conversion and refund the payment to the member.
[7] A member may
purchase only part of the service, but may not exceed the limits imposed under
26 United States Code 415(n). The
Internal Revenue Service places limits on the type and amount of service credit
purchases that may be made under a qualified government plan like PERS.
[8] PERS, "OPERS Employer Notice," June 19, 2007 (available online at: https://www.opers.org/pubs-archive/employers/notices/2007/EN-Certification-Local-Rates-2008.pdf).
[9] Current law
unchanged by the bill provides that the Board may establish employer
contribution rates on behalf of all officers in an amount that cannot exceed
18.1% of the officers' salaries.
[10] "Municipal public safety director"
means a person who serves full time as the public safety director of a municipal
corporation with the duty of directing the activities of the municipal
corporation's police and fire department.
(R.C. 145.01(VV).
[11] Eligible municipal public safety director
credit is service credit earned from September 29, 2005, to the bill's effective
date. (R.C. 145.01(WW) and (YY).)
[12] Medicare has two parts: Part A, the hospital portion of the coverage,
and Part B, which covers physician charges and other outpatient care.
[13] Almost all of those who have Medicare Part B pay the
same premium. However if in any year an
increase in the premium exceeds the amount a Social Security beneficiary
receives as a cost-of-living adjustment, the premium increase for that
beneficiary is limited to the amount of the adjustment.
[14] Under the bill, the
employee contribution is to be initially one per cent higher than that paid by
PERS public safety officers, but not to exceed two per cent higher than that
paid by public safety officers.
[15] With limited
exceptions, final average salary is the average of the three years of
contributing service in which the member's earnable salary was highest (R.C.
145.01).